2018 Instructions for Form 8965 - Internal Revenue Service

Department of the Treasury Internal Revenue Service

2018 Instructions for Form 8965

Health Coverage Exemptions (and Instructions for Figuring Your Shared Responsibility Payment)

For each month you must either:

Have Health Coverage or a Coverage Exemption

See the Form 10O40Rinstructions for information on reporting full-year

coverage or exempt.

OR

$ Make a Shared Responsibility Payment See Shared Responsibility Payment for information on how to figure your shared responsibility payment.

Section references are to the Internal Revenue Code unless otherwise noted.

Future Developments

another member of your tax household (defined later) had neither health care coverage nor a coverage exemption. If you can claim any part-year exemptions for specific members of your tax household, use Form 8965. This will reduce the amount of your shared responsibility payment.

For the latest information about developments related to Form 8965 and its instructions, such as legislation enacted after they were published, go to Form8965.

What's New

Hardship coverage exemption. You can now claim a coverage exemption for certain types of hardships on your tax return. See the Types of Coverage Exemptions chart and General hardship (code G), for more information. Checkbox on Form 1040. The "Full-year coverage" checkbox that was on line 61 of the 2017 Form 1040 has been moved to page 1 of the 2018 Form 1040 and retitled "Full-year health care coverage or exempt." You will now check that box if you, your spouse (if filing jointly), and anyone you can or do claim as a dependent had qualifying health care coverage or a coverage exemption that covered all of 2018 or a combination of qualifying health care coverage and coverage exemptions for every month of 2018. If you can check the box on Form 1040, you don't need to file Form 8965.

General Instructions

Reminder: If you need health coverage, visit to learn about health insurance options that are available for you and your family, how to purchase health insurance, and how you might qualify to get financial assistance with the cost of insurance.

Coverage exemptions. If you can't check the "Full-year health care coverage or exempt" box on page 1 of Form 1040, and if you or another member of your tax household was granted a coverage exemption from the Marketplace that didn't cover every month of 2018, complete Part I of Form 8965. If you or another member of your tax household is claiming a coverage exemption that didn't cover every month of 2018 on your tax return, complete Part III of Form 8965. If your household income or your gross income is less than your filing threshold, you can check the "Full-year health care coverage or exempt" box on Form 1040. You don't need to file Form 8965. Depending on your situation, you may need to complete one or more parts of the form.

Shared responsibility payment. You must make a shared responsibility payment if, for any month, you or another member of your tax household didn't have health care coverage (referred to as "minimum essential coverage") or a coverage exemption. See Shared Responsibility Payment, later, to figure your payment, if any. Report your shared responsibility payment on Schedule 4 (Form 1040), line 61.

Purpose of Form

The individual shared responsibility provision requires each individual to have health care coverage, have a health coverage exemption, or make a shared responsibility payment with their tax return. If you can't check the "Full-year health care coverage or exempt" box on page 1 of Form 1040, use these instructions to figure your shared responsibility payment if for any month you or

Who Must File

File Form 8965 to report or claim a coverage exemption if all of the following apply.

? You are filing a Form 1040 (even if you are filing it because

you are a dual-status alien for your first year of U.S. residency or a nonresident or dual-status alien who elected to file a joint return with a U.S. spouse),

Dec 18, 2018

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Cat. No. 60810G

? You can't be claimed as a dependent by another taxpayer, ? For one or more months of 2018, you or someone else in

your tax household didn't have minimum essential coverage or a coverage exemption, and

? You can claim any part-year exemptions or exemptions for

specific members of your tax household. This will reduce the amount of your shared responsibility payment. Attach Form 8965 to Form 1040.

Form 8965 is used only to claim and report coverage

TIP exemptions. If you are unable to check the "Full-year

health care coverage or exempt" box on Form 1040, you don't need to report the months when you and other members of your tax household had minimum essential coverage on Form 8965, but you may need to report a shared responsibility payment on your Form 1040. First check to see if you're eligible for any coverage exemptions for some or all of the months that you or a member of your tax household weren't covered.

Not required to file a tax return. If you aren't required to file a tax return, your tax household is exempt from the shared responsibility payment and you don't need to file a tax return to claim the coverage exemption. However, if you aren't required to file a tax return but choose to file anyway, you can check the "Full-year health care coverage or exempt" box on Form 1040. You don't have to file Form 8965. (See the instructions under Part II, later, to see if your household or gross income is below the filing threshold.)

Form 1040NR and Form 1040NR-EZ filers. If you file a Form 1040NR or Form 1040NR-EZ (including a dual-status tax return for your last year of U.S. residency) or someone claims you as a dependent on a Form 1040NR or Form 1040NR-EZ, you are exempt from the shared responsibility payment. Don't attach Form 8965 to your Form 1040NR or Form 1040NR-EZ.

For more information, see chapters 1 and 6 of Pub. 519.

Only one Form 8965 should be filed for each tax

! household. If you can be claimed as a dependent by

CAUTION another taxpayer, you don't need to file Form 8965 and don't owe a shared responsibility payment.

More Information

For more information on coverage exemptions, the shared responsibility payment, and other terms discussed in these instructions, including answers to frequently asked questions and links to the final regulations issued by the Treasury Department and IRS, go to SRP.

Types of Coverage Exemptions

The Types of Coverage Exemptions chart shows the types of coverage exemptions available and whether the coverage exemption may be granted by the Marketplace, claimed on your tax return, or both. If you are claiming a coverage exemption in Part III, the right-hand column of the chart shows which code you should enter in column (c) to claim that particular coverage exemption.

If the coverage exemption can be granted only by the Marketplace (for example, a coverage exemption based on membership in certain religious sects), apply to the Marketplace for that coverage exemption before filing your tax return. If the Market-

place hasn't processed your application before you file your tax return, complete Part I and enter "pending" in column (c) for each individual listed.

Definitions

Tax household. For purposes of Form 8965, your tax household generally includes you, your spouse (if filing a joint return), and any individual you claim as a dependent on your tax return. It also generally includes each individual you can, but don't, claim as a dependent on your tax return. (But see Dependents of more than one taxpayer, later.) To find out if you can claim someone as your dependent, see Dependents in Pub. 501 or Who Qualifies as Your Dependent in the Instructions for Form 1040.

Birth, death, or adoption. An individual is included in your tax household in a month only if he or she is alive for the full month. Also, if you adopt a child during the year, the child is included in your tax household only for the full months that follow the month in which the adoption occurs. If each individual who is a member of your tax household for any month had coverage or had a coverage exemption for all the months they were members of your tax household, you will check the "Full-year health care coverage or exempt" box on your return. For information on how to identify months during which an individual was not a member of your tax household for one of these reasons, see Member of tax household born or adopted during the year and Member of tax household died during the year in Part III, later. You should file Form 8965 to identify these months only if you are otherwise filing Form 8965 to claim a coverage exemption.

Dependents of more than one taxpayer. Your tax household doesn't include someone you can, but don't, claim as a dependent if the dependent is properly claimed on another taxpayer's return or can be claimed by a taxpayer with higher priority under the tie-breaker rules described in Pub. 501.

Household income. You will need to calculate your household income if any of the following apply.

? You wish to check the "Full-year health care coverage or

exempt" box on Form 1040 because your household income is below the filing threshold,

? You wish to claim the exemption for coverage that is con-

sidered unaffordable, or

? You need to figure your shared responsibility payment.

For purposes of Form 8965, your household income is your modified adjusted gross income (MAGI) plus the MAGI of each individual in your tax household whom you claim as a dependent if that individual is required to file a tax return because his or her income meets the income tax return filing threshold. Use the Filing Requirements for Children and Other Dependents chart to determine whether your dependent is required to file his or her own tax return.

Modified adjusted gross income (MAGI). For purposes of Form 8965, your MAGI is your adjusted gross income plus certain other items from your tax return.

Your MAGI for purposes of the individual shared re-

! sponsibility provision may be different than the MAGI

CAUTION that applies for other tax purposes, including the premium tax credit.

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Types of Coverage Exemptions

This chart shows all of the coverage exemptions available for 2018, including information about where each can be obtained and the code that is to be used on Form 8965 when you claim the exemption. If your coverage exemption was granted by the Marketplace, you will need to enter the Exemption Certificate Number (ECN) provided by the Marketplace (see the instructions for Part I). For additional details about the eligibility rules for the coverage exemptions that are claimed on the tax return, see the instructions for Part III, later. For additional details about how you can check the "Full-year health care coverage or exempt" box on Form 1040 if your household or gross income is below your filing threshold, see the instructions for Part II, later.

Coverage Exemption

Granted by Marketplace

Claimed on Tax Return

Code for Exemption

Income below the filing threshold--Your gross income or your household income was less than your applicable minimum threshold for filing a tax return.

No Code See Part II

Coverage considered unaffordable--The required contribution is more than 8.05% of your household income.

A

Short coverage gap--You went without coverage for less than 3 consecutive months during the year.

B

Citiz?enAsUli.vSi.ncgitaizbernooardaarnedsidceenrttaailniennownhcoitwizaesnpsh--ysYiocuallwyeprree:sent in a foreign country or

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330 who

full days during any period of was a bona fide resident of a

12 consecutive foreign country

months; or countries

for

an

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an income tax treaty with a nondiscrimination clause, and you were a bona fide resident of a

fore?ignNcootulnatwryfuflolyr

an uninterrupted period that includes the present in the U.S. and not a U.S. citizen

entire tax year; or U.S. national.

For

more

C

information about who is treated as lawfully present in the U.S. for purposes of this coverage

exem? pAtionno,nvriesistidwewnwt .aHlieena,lthinCcalurdei.nggov(1; )ora dual-status alien in the first year of U.S. residency and

(2) a nonresident alien or dual-status alien who elects to file a joint return with a U.S. spouse.

This exemption doesn't apply if you are a nonresident alien for 2018, but met certain presence

requirements and elected to be treated as a resident alien. For more information, see Pub. 519.

Members of a health care sharing ministry--You were a member of a health care sharing ministry.

D

Members of Indian tribes--You were either a member of a federally recognized Indian tribe,

including an Alaska Native Claims Settlement Act (ANCSA) Corporation Shareholder (regional or village), or you were otherwise eligible for services through an Indian health care provider or

*

E

the Indian Health Service.

Incarceration--You were in a jail, prison, or similar penal institution or correctional facility after the disposition of charges.

F

Aggregate self-only coverage considered unaffordable--Two or more family members'

aggregate cost of self-only employer-sponsored coverage was more than 8.05% of household

G

income, as was the cost of any available employer-sponsored coverage for the entire family.

Resident of a state that didn't expand Medicaid--Your household income was below 138%

of the federal poverty line for your family size and at any time in 2018 you resided in a state that

G

didn't participate in the Medicaid expansion under the Affordable Care Act.

General hardship--You experienced a hardship that prevented you from obtaining coverage under a qualified health plan.

G

Member of tax household born or adopted during the year--The months before and

including the month that an individual was added to your tax household by birth or adoption. You

H

should claim this exemption only if you also are claiming another exemption on your Form 8965.

Member of tax household died during the year--The months after the month that a member

of your tax household died during the year. You should claim this exemption only if you also are

H

claiming another exemption on your Form 8965.

Members of certain religious sects--The Marketplace determined that you are a member of a recognized religious sect.

Need ECN See Part I

Ineligible for Medicaid based on a state's decision not to expand Medicaid coverage-- The Marketplace found that you would have been determined ineligible for Medicaid solely because the state in which you resided didn't participate in Medicaid expansion under the Affordable Care Act.

Need ECN See Part I

Coverage considered unaffordable based on projected income--The Marketplace determined that you didn't have access to coverage that is considered affordable based on your projected household income.

Need ECN See Part I

Certain Medicaid programs that are not minimum essential coverage--The Marketplace determined that you were (1) enrolled in Medicaid coverage provided to a pregnant woman that isn't recognized as minimum essential coverage; (2) enrolled in Medicaid coverage provided to a medically needy individual (also known as Spend-down Medicaid or Share-of-Cost Medicaid) that isn't recognized as minimum essential coverage; or (3) enrolled in Medicaid coverage provided to a medically needy individual and were without coverage for other months because the spend-down had not been met.

Need ECN See Part I

*The coverage exemption for members of Indian tribes is no longer granted by the Marketplace, except in Connecticut. See the instructions for Part I, later, to claim the exemption.

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Figure your MAGI by adding the amounts reported on Form 1040, lines 2a and 7. If you claimed the foreign earned income exclusion, housing exclusion, or housing deduction, add the amounts from Form 2555, lines 45 and 50, or Form 2555-EZ, line 18. If your dependent has a filing requirement, but you elect to report the dependent's income on Form 8814, include the dependent's MAGI in the household income by adding Form 8814, line 1b, and the smaller of Form 8814, line 4 or 5.

You can use Step 3 under Shared Responsibility Pay-

TIP ment, later, to figure your household income.

Marketplace. A Marketplace, or Health Insurance Marketplace (also referred to as an "Exchange"), is a governmental agency or nonprofit entity that makes qualified health plans available to individuals and grants certain coverage exemptions. The term "Marketplace" refers to state Marketplaces, regional Marketplaces, subsidiary Marketplaces, and the Federally-facilitated Marketplace.

Minimum essential coverage. Minimum essential coverage is health coverage that satisfies the requirement for individuals to have health coverage. Minimum essential coverage generally includes coverage under a government-sponsored program, coverage from your employer, and coverage under certain plans that you buy in the individual market. If you, or a member of your family, had minimum essential coverage in 2018, the entity that provided the coverage is required to send you a Form 1095-A, Form 1095-B, or Form 1095-C that lists individuals in your family who were enrolled in minimum essential coverage and shows their months of coverage. Individuals enrolled in a qualified health plan through the Marketplace generally receive this information on Form 1095-A, Health Insurance Marketplace Statement. Individuals enrolled in health insurance coverage outside the Marketplace, in a government-sponsored program, or in certain other coverage generally receive this information on Form 1095-B, Health Coverage. Individuals enrolled in employer-sponsored coverage generally receive this information on either Form 1095-B or on Part III of Form 1095-C,

Filing Requirements for Children and Other Dependents

Use this chart to help you determine if a dependent you claimed on your return must file his or her own tax return. If the dependent is required to file a tax return because his or her income meets the filing threshold, the dependent's MAGI must be included in household income for purposes of Form 8965, even if you elect to report that dependent's income on Form 8814. Don't include a dependent's MAGI in household income if the dependent's income is below the filing threshold, even if he or she chooses to file a return for another reason.

In this chart, unearned income includes taxable interest, ordinary dividends, capital gain distributions, unemployment

TIP

compensation, taxable social security benefits, pensions, annuities, and distributions of unearned income from a trust. Earned

income includes salaries, wages, tips, professional fees, and taxable scholarship and fellowship grants. Gross income is the total

of your unearned and earned income.

Single dependents. Was your dependent either age 65 or older or blind?

No. Your dependent must file a return if any of the following apply.

? His or her unearned income was over $1,050. ? His or her earned income was over $12,000. ? His or her gross income was more than the larger of--

? $1,050, or ? His or her earned income (up to $11,650) plus $350.

Yes. Your dependent must file a return if any of the following apply.

? His or her unearned income was over $2,650 ($4,250 if 65 or older and blind). ? His or her earned income was over $13,600 ($15,200 if 65 or older and blind). ? His or her gross income was more than the larger of--

? $2,650 ($4,250 if 65 or older and blind), or ? His or her earned income (up to $11,650) plus $1,950 ($3,550 if 65 or older and blind).

Married dependents. Was your dependent either age 65 or older or blind?

No.Your dependent must file a return if any of the following apply.

? His or her unearned income was over $1,050. ? His or her earned income was over $12,000. ? His or her gross income was at least $5 and his or her spouse files a separate return and itemizes deductions. ? His or her gross income was more than the larger of--

? $1,050, or ? His or her earned income (up to $11,650) plus $350.

Yes. Your dependent must file a return if any of the following apply.

? His or her unearned income was over $2,350 ($3,650 if 65 or older and blind). ? His or her earned income was over $13,300 ($14,600 if 65 or older and blind). ? His or her gross income was at least $5 and his or her spouse files a separate return and itemizes deductions. ? His or her gross income was more than the larger of--

? $2,350 ($3,650 if 65 or older and blind), or ? His or her earned income (up to $11,650) plus $1,650 ($2,950 if 65 or older and blind).

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Types of Minimum Essential Coverage

Minimum essential coverage means health care coverage under any of the following programs. It doesn't, however, include coverage consisting solely of excepted benefits. Excepted benefits include stand-alone vision and dental plans, workers' compensation coverage, and coverage limited to a specified disease or illness.

Employer-sponsored coverage:

?

Group health insurance coverage for employees under:

???

A plan or coverage offered in the small or large group market within a state, A plan provided by a governmental employer, such as the Federal Employees Health Benefits program, or A grandfathered health plan offered in a group market.

?????

A self-insured health plan for employees, COBRA coverage, Retiree coverage, Coverage under an expatriate health plan for employees and related individuals, or Department of Defense Nonappropriated Fund Health Benefits Program.

Individual market coverage:

?????

Health insurance you purchase directly from an insurance company, Health insurance you purchase through the Marketplace, Health insurance provided through a student health plan, Catastrophic coverage, or Coverage under an expatriate health plan for non-employees such as students and missionaries.

Coverage under government-sponsored programs:

?????????

Medicare Part A coverage, Medicare Advantage plans, Most Medicaid coverage,* Children's Health Insurance Program (CHIP) coverage, Most types of TRICARE coverage, Comprehensive health care programs offered by the Department of Veterans Affairs, Health coverage provided to Peace Corps volunteers, Refugee Medical Assistance, or Coverage through a Basic Health Program (BHP) standard health plan.

Other coverage:

? Coverage under a group health plan provided through insurance regulated by a foreign government if (1) a covered individual is physically

absent from the United States for at least 1 day during the month, or (2) a covered individual is physically present in the United States for a full month

and??coCCveeorrvateagrienagpceorovrveeicdraoeggsenhipzeeraodlvthbidybeeHdnHteoSfibtasusswimnitheinisnismtohuwemnUeensrissteewdnhtSioatalactreeosnve'wtrehamigleep,tlholieysetieneddsi,nse.gxopva/tCriCatIeIOs/tPartuosg,rams-and-Initiatives/Health-Insurance-

Market-Reforms/Minimum-Essential-Coverage.html (click on link for approved plans).

*Medicaid programs that provide limited benefits generally don't qualify as minimum essential coverage. However, individuals with certain types of limited-benefit Medicaid coverage qualify for a coverage exemption. See the Types of Coverage Exemptions chart.

Employer-Provided Health Insurance Offer and Coverage. You should receive the Form 1095-A, 1095-B, or 1095-C by early February 2019, if applicable. For more information on these forms, see the instructions for Schedule 4 (Form 1040), line 61. The Types of Minimum Essential Coverage chart provides more information about the plans and arrangements that are minimum essential coverage.

Timing. You are considered to have minimum essential coverage for a month if you have it for at least 1 day during that month. For example, if you start a new job on June 26 and are covered under your employer's plan starting on that day, you are treated as having coverage for the entire month of June.

Foreign coverage. In general, coverage provided by a foreign employer to its employees and related individuals is minimum essential coverage. Individuals with such coverage should see Pub. 974, Premium Tax Credit, for more information on which coverage provided by a foreign employer is minimum essential coverage. However, coverage that an individual purchases directly from a foreign health insurance issuer or that is provided by the government of a foreign country doesn't qualify as minimum essential coverage unless it is recognized as minimum essential coverage by the Department of Health and Human Services (HHS). To find out if HHS has recognized particular forms of foreign coverage as minimum essential coverage, go to IIO/Programs-and-Initiatives/HealthInsurance-Market-Reforms/Minimum-Essential-Coverage.html,

and scroll down and click on the link for the list of approved plans.

Coverage for business owners. Minimum essential coverage includes coverage provided to a business owner (such as a partner or sole proprietor) under a plan that is eligible employer-sponsored coverage with respect to at least one employee.

Specific Instructions

Part I--Marketplace-Granted Coverage

Exemptions for Individuals

If you can't check the "Full-year health care coverage or exempt" box on page 1 of Form 1040 and you or another member of your tax household has been granted a coverage exemption for one or more months from the Marketplace, or has an application for a coverage exemption for one or more months pending with the Marketplace, complete Part I to report these exemptions. Complete a line for each individual who was granted or has a pending application for a Marketplace-granted coverage exemption. If an individual was granted or has a pending application for more than one coverage exemption from the Marketplace, complete a separate line for each coverage exemption for that individual. If you need more space, attach a separate statement showing the information required in columns (a) through (c) for each additional coverage exemption.

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